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GST returns under composition scheme have a surprise: Finance Secretary

GST returns filed by companies opting for the GST composition scheme has left the government surprised as 5 lakh companies reported such a turnover which works out to annual sales of Rs 5 lakh only. Businesses with turnover up to Rs 20 lakh are exempt from the Goods and Services Tax (GST) regime, which kicked in from July 1, 2017. Out of 10 lakh businesses that opted for the composition scheme during the July-September period, about 7 lakh have filed GST returns for the quarter.

 “To our surprise, out of 7 lakh, 5 lakh people had filed such return for the quarter which results into annual turnover of less than Rs 5 lakh. Now we are wondering why did they register then? Up to Rs 20 lakh (annual turnover) there is no need to register in GST,” Finance Secretary Hasmukh Adhia said at an industry meet.

He said if the annual turnover of a company is Rs 5 lakh, why would it register under GST. Goods and service tax (GST) returns filed by companies opting for the GST composition scheme has left the government surprised as 5 lakh companies reported such a turnover which works out to annual sales of Rs5 lakh only. Businesses with turnover up to Rs20 lakh are exempt from the GST regime, which kicked in from 1 July 2017. Out of 10 lakh businesses that opted for the composition scheme during the July-September period, about 7 lakh have filed GST returns for the quarter. To our surprise, out of 7 lakh, 5 lakh people had filed such return for the quarter which results into annual turnover of less than Rs5 lakh. Now we are wondering why did they register then? Up to Rs20 lakh (annual turnover) there is no need to register in GST, finance secretary Hasmukh Adhia said at an industry meet.

He said if the annual turnover of a company is Rs5 lakh, why would it register under GST. “We didn’t know this statistics, when we increased the limit for availing composition scheme to Rs1.5 crore. There is no need to do that,” Adhia said. The GST Council comprising the Centre and states in its November 2017 meeting increased the threshold for composition scheme to Rs1.5 crore and also decided to amend the GST law to raise the statutory threshold to Rs2 crore. Till then the threshold for scheme was Rs1 crore.

Under the composition scheme, traders and manufacturers are allowed to pay taxes at a reduced rate of 1%. While restaurant owners have to pay at 5% rate. “5 lakh businesses showing less than Rs5 lakh annual turnover. And the average of 7 lakh businesses, was coming to Rs14 lakh (turnover),” Adhia said. GST returns filed by companies opting for the GST composition scheme has left the government surprised as 5 lakh companies reported such a turnover which works out to annual sales of Rs 5 lakh only, reported PTI. Businesses with turnover up to Rs 20 lakh are exempt from the Goods and Services Tax (GST) regime, which kicked in from July 1, 2017. Out of 10 lakh businesses that opted for the composition scheme during the July-September period, about 7 lakh have filed GST returns for the quarter.

To our surprise, out of 7 lakh, 5 lakh people had filed such return for the quarter which results into annual turnover of less than Rs 5 lakh. Now we are wondering why did they register then? Up to Rs 20 lakh (annual turnover) there is no need to register in GST,” Finance Secretary Hasmukh Adhia said at an industry meet. He said if the annual turnover of a company is Rs 5 lakh, why would it register under GST.

“We didn’t know this statistic, when we increased the limit for availing composition scheme to Rs 1.5 crore. There is no need to do that,” Adhia said. The GST Council comprising the Centre and states in its November 2017 meeting increased the threshold for composition scheme to Rs 1.5 crore and also decided to amend the GST law to raise the statutory threshold to Rs 2 crore. Till then the threshold for scheme was Rs 1 crore. Under the composition scheme, traders and manufacturers are allowed to pay taxes at a reduced rate of 1 per cent. While restaurant owners have to pay at 5 per cent rate. “5 lakh businesses showing less than Rs 5 lakh annual turnover. And the average of 7 lakh businesses, was coming to Rs 14 lakh (turnover),” Adhia said.

The GST returns filed by companies opting for the composition scheme has left the government surprised, according to finance secretary Hasmukh Adhia. Out of 1 million businesses that opted for the composition scheme during the September 2017 quarter, about 700,000 have filed GST returns. Out of these 700,000 firms, about 500,000 reported a turnover of less than Rs.500,000. He said that if the annual turnover of a company is Rs.500,000 then why would it register under GST as businesses with turnover up to Rs.2 million are exempt from the GST regime. The government was unaware of this statistics when the limit for availing composition scheme was increased to Rs.15 million in November 2017. The government had also decided to raise the statutory threshold of the scheme to Rs.20 million.

GST returns filed by companies opting for the GST composition scheme has left the government surprised as 5 lakh companies reported such a turnover which works out to annual sales of Rs 5 lakh only. Businesses with turnover up to Rs 20 lakh are exempt from the Goods and Services Tax (GST) regime, which kicked in from July 1, 2017. Out of 10 lakh businesses that opted for the composition scheme during the July-September period, about 7 lakh have filed GST returns for the quarter.

To our surprise, out of 7 lakh, 5 lakh people had filed such return for the quarter which results into annual turnover of less than Rs 5 lakh. Now we are wondering why did they register then? Up to Rs 20 lakh (annual turnover) there is no need to register in GST,” Finance Secretary Hasmukh Adhia said at an industry meet. He said if the annual turnover of a company is Rs 5 lakh, why would it register under GST. We didn’t know this statistics, when we increased the limit for availing composition scheme to Rs 1.5 crore. There is no need to do that,” Adhia said.

The GST Council comprising the Centre and states in its November 2017 meeting increased the threshold for composition scheme to Rs 1.5 crore and also decided to amend the GST law to raise the statutory threshold to Rs 2 crore.Till then the threshold for scheme was Rs 1 crore.Under the composition scheme, traders and manufacturers are allowed to pay taxes at a reduced rate of 1 per cent. While restaurant owners have to pay at 5 per cent rate.

“5 lakh businesses showing less than Rs 5 lakh annual turnover. And the average of 7 lakh businesses, was coming to Rs 14 lakh (turnover),” Adhia said. Recently in an internal research done by the finance ministry, it was unearthed that around 5 lakh companies were those who had only 5 lakh or less turnover for a year, which clearly shows that they opted composition scheme without any strong need to do so. In the GST provisions, it is stated that the business units which are under the threshold limit of 20 lakhs per annum turnover do not need to get registered under the GST.

Just for the knowledge, around 7 lakh business units filed GST returns for the July – September quarter out of total 10 lakh composition scheme registered taxpayers. Finance Secretary Hasmukh Adhia said in an industrial meeting, “To our surprise, out of 7 lakh, 5 lakh people had filed such return for the quarter which results into annual turnover of less than Rs 5 lakh. Now we are wondering why did they register then? Up to Rs 20 lakh (annual turnover) there is no need to register in GST.”

It is unknown why those business units with lesser turnover needed to register under GST composition scheme. Adhia added that “We didn’t know these statistics when we increased the limit for availing composition scheme to Rs 1.5 crore. There is no need to do that.” In a late November GST council meeting 2017, the council approved an increase in threshold limit for composition scheme up to 1.5 crores and decided for amendments in the law regarding the raising statutory threshold to Rs 2 crore.

GST returns filed by companies opting for the GST composition scheme has left the government surprised as 5 lakh companies reported such a turnover which works out to annual sales of Rs 5 lakh only. Businesses with turnover up to Rs 20 lakh are exempt from the Goods and Services Tax (GST) regime, which kicked in from July 1, 2017. Out of 10 lakh businesses that opted for the composition scheme during the July-September period, about 7 lakh have filed GST returns for the quarter. “To our surprise, out of 7 lakh, 5 lakh people had filed such return for the quarter which results into annual turnover of less than Rs 5 lakh. Now we are wondering why did they register then? Up to Rs 20 lakh (annual turnover) there is no need to register in GST,” Finance Secretary Hasmukh Adhia said at an industry meet.

He said if the annual turnover of a company is Rs 5 lakh, why would it register under GST. “We didn’t know this statistics, when we increased the limit for availing composition scheme to Rs 1.5 crore. There is no need to do that,” Adhia said. The GST Council comprising the Centre and states in its November 2017 meeting increased the threshold for composition scheme to Rs 1.5 crore and also decided to amend the GST law to raise the statutory threshold to Rs 2 crore.

Till then the threshold for scheme was Rs 1 crore. Under the composition scheme, traders and manufacturers are allowed to pay taxes at a reduced rate of 1 per cent. While restaurant owners have to pay at 5 per cent rate. “5 lakh businesses showing less than Rs 5 lakh annual turnover. And the average of 7 lakh businesses, was coming to Rs 14 lakh (turnover),” Adhia said.The GST Council comprising the Centre and states in its November 2017 meeting increased the threshold for composition scheme to Rs 1.5 crore and also decided to amend the GST law to raise the statutory threshold to Rs 2 crore.Till then the threshold for scheme was Rs 1 crore. Under the composition scheme, traders and manufacturers are allowed to pay taxes at a reduced rate of 1 per cent. While restaurant owners have to pay at 5 per cent rate. “5 lakh businesses showing less than Rs 5 lakh annual turnover. And the average of 7 lakh businesses, was coming to Rs 14 lakh (turnover),” Adhia said.

Five lakh businesses have opted for the composition scheme under the goods and services tax (GST), which allows them to pay taxes at a concessional rate and makes compliance easy, the government said on Monday. Nearly 71 lakh excise, service tax and value-added tax (VAT) assessees have migrated to the GST Network (GSTN) till 25 July. Besides, another 12 lakh new registrations came about under the GST regime.“The figure of dealers opting for composition in GST is 5.12 lakh up to 30th (July). The last date for opting is August 16,” revenue secretary Hasmukh Adhia tweeted.The composition scheme is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs75 lakh—Rs50 lakh in the case of eight north-eastern states and the hilly state of Himachal Pradesh. The objective behind it is to bring simplicity and reduce the compliance cost for small taxpayers. The scheme is optional under which manufacturers other than those of ice cream, pan masala and tobacco products have to pay a 2% tax on their annual turnover. The tax rate is 5% for restaurant services and 1% for traders.

As per the Central GST Act, businesses are eligible to opt for the composition scheme if a person is neither engaged in any inter-state outward supplies of goods nor into making any supply of goods through an electronic commerce operator who is required to collect tax at source. While a regular taxpayer has to pay taxes on a monthly basis, a supplier registered under the composition scheme is required to file only one return and pay taxes on a quarterly basis. Also, a composition taxpayer is not required to keep detailed records that a normal taxpayer is supposed to maintain.

Also Read: Budget 2018: Foundation For A Robust Economic Performance

 

 

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